Flawless Diamond (India) Ltd Directors Report.

DIRECTORS

TO THE MEMBERS,

FLAWLESS DIAMOND (INDIA) LIMITED,

The Directors hereby present their 24th Annual Report on the business and operations of the Company and the Financial Accounts for the year ended 31st March, 2013.

Particulars (Rs In Thousand)
Year ended 31.03.2013 Year ended 31.03.2012
Total Income 87167.91 755908.32
Profit / (Loss) Before Depreciation & Taxes (6407.97) (1930.03)
Less: Depreciation 2869.52 3558.12
Profit / (Loss) Before Tax (9277.50) (5488.15)
Less: Provision for Current Tax 0.00 0.00
Less: Provision for Deferred Taxation (2865.18) (8970.87)
Less: Earlier Tax 865.34 0.00
Profit / (Loss) After Tax for the year (7277.66) (3482.72)
Add: Balance in Reserves & Surplus 621401.38 617918.66
Less: Appropriations 0.00 0.00
Closing Balance 614123.72 621401.38

BUSINESS OPERATION

During the year the company has suffered a loss, of Rs 92.77 lakhs as against the loss of Rs 54.88 lakhs for the previous year. The loss is due to global slowdown and lower economic growth resulting to non realization of exports proceeds from the overseas parties. The company is very hopeful that it will recover from the slowdown and achieve its past glory in near future.

DIVIDEND

In view of the loss during the year the Board of Directors has decided to not to declare the dividend.

RESEARCH AND DEVELOPMENT

Research and Development is a vital area of the Companys focus and has been a key factor in maintaining the companys growth. Leveraging on its strong research and development department, your Company has been constantly developing new and latest designs of jewellery and lifestyle products but due to overall slowdown and sudden break in the business activity of the company, the research work could not be carried out during the year.

CORPORATE GOVERNANCE

Your Company is committed to maintain the highest standards of Corporate Governance. Your Directors adhere to the stipulations set out in the Listing Agreement with the Stock Exchange and have implemented all the prescribed requirements. A separate report on Corporate Governance is enclosed as a part of this Annual Report of the Company. A certificate from Auditors of the Company regarding compliance on Corporate Governance as stipulated under clause 49 of the Listing Agreement is annexed to the report on Corporate Governance

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors Responsibility Statement, It is hereby confirmed that:

(i) In the preparation of the annual accounts, for the Financial Year ended 31st March, 2013, the applicable accounting standards had been followed;

(ii) The Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the Loss of the Company for the year ended 31st March, 2013;

(iii) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) The Directors have prepared the annual accounts of the Company for the Financial Year ended 31st March, 2013 on going concern basis. However, the companys secured creditor ICICI Bank has filed winding up petition u/s 439 of the Companies Act, 1956 in the Honourable Bombay High Court, which may affect the Going Concern Status. The Punjab and Sind Bank has also initiated winding up petition u/s 439 of the Companies Act, 1956 in the Honourable Bombay High Court.

DIRECTORS

Pursuant to Article 164 of the Article of Association of the Company Shri Rajiv Kamdar and Shri Kamal U. Jain, Directors of the Company, retire by rotation at the forthcoming Annual General Meeting and being eligible, offer them selves for re-appointment.

DEPOSITS

Your Company has not invited or accepted any fixed deposits from the public during the year under review.

AUDITORS

M/s. Suresh Anchaliya & Co., Chartered Accountants, the retiring Auditors of the Company who holds Office in accordance with the provisions of the Companies Act, 1956 up to the conclusion of the forthcoming Annual General Meeting and being eligible offer themselves for re-appointment.

The Company has received letter from the Auditors to the effect that their re-appointment, if made, would be within the prescribed limit under Section 224 (1B) of the Companies Act, 1956 and that they are not disqualified for such re-appointment within the meaning of Section 226 of the said Act.

AUDITORS REPORT

The adverse comment or qualification in the Auditors Report are self explanatory and are mainly related to statutory dues and default in the repayment of bank loan

MATERIAL CHANGES

a. The Companys account with the banks has been declared NPA (Non Performing Assets) by the banks for non realization of export proceeds and non payment of loans and interest. The banks have moved the matter before Debt Recovery Tribunal and initiated recovery proceeding under SARFAESI Act, 2002 for recovery of their dues. The Debt Recovery Tribunal in its order instructed the company to pay the ICICI Bank loan amount with interest at the rate 18% P.A. from 30th May, 2012 onwards.. The Directors of the company are trying their best to realize the export proceeds at the earliest and pay off the bank dues.

b. There is no manufacturing activities carried out during the year under review.

c. The secured creditor ICICI Bank has moved winding up petition u/s 439 of the Companies Act, 1956 before the Honourable Bombay High Court for dissolution of the company and the matter is pending before the Honourable Bombay High Court. However the company has entered into the consent term with the "ICICI Bank" for repayment of loan with interest on or before 31.03.2014.

LISTING

The shares of the company is listed at The Bombay Stock Exchange Ltd (BSE), Mumbai. The company has paid the listing fees to stock exchange.

MANAGEMENTS DISCUSSION AND ANALYSIS REPORT

A detailed review of the progress of the project and the future outlook of the Company and its business as stipulated under clause 49 of the Listing Agreement with the Stock Exchange is presented in a separate section forming part of the Annual Report.

SHORT TERM LOAN FROM BODIES CORPORATES

The Company has accepted short term loan from the bodies corporate to meet the requirement of repayment of loan to the bankers.

PARTICULARS OF EMPLOYEES

The overall industrial and employee relations remained healthy. There are no Such employees pursuant to Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended by the Companies Amendment Act, 1988. Hence, no particulars are required to be appended to this report in this regard.

DEMATERIALISATION OF SHARES

77.97% Shares of total equity capital is held in dematerialised form with NSDL and 16.77% Shares of total equity capital is held in dematerialised form with CDSL, as on 31.03.2013.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS & OUTGO

The information pursuant to Section 217(i)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, is given as under.

A. Conservation of Energy: As the Company is not covered in the list of industries required to furnish information in form A in relation to conservation of energy, the same is not given.

B. Technology Absorption, Research and Development (R&D): The Companys manufacturing unit is not in operation during the year.

C. Foreign Exchange Earning & Outgo: The total exports for the year 2012-13 amounts to Rs NIL

Total Foreign Exchange used & earned Rs (In Lakhs)
Total Foreign Exchange used : Nil
Total Foreign Exchange earned : 945.98

ACKNOWLEDGEMENT

The Directors wish to place on record their appreciation for the consistent assistance and co-operation received from the Central and State Government Authorities, Companys Bankers, Directors, Vendors, Members and dedicated Employees for the confidence in the Company and its management through the periods of prosperity and adversity.

Registered Office: On behalf of the Board of Directors
136, Panchratna,
Opera House,
Mumbai - 400 004.
Place: Mumbai Kamal U. Jain
Date :30th May, 2013 Chairman